AUD/USD outlook: Lifted by higher than expected inflation
|AUD/USD
AUDUSD jumped to two-week high (0.7116) in early Wednesday’s trading following release of Australian CPI data.
Inflation remained elevated and unchanged in January compared to previous month (3.8%; Core 3.4% - the highest in 16 months) beating forecasts (3.3%; Core 3.7%) and boosting bets for another rate hike, after the RBA raised interest rates by 25 basis points to 3.85% earlier this month, reversing its path after three rate cuts in 2025.
January numbers contribute to the central bank’s expectations that inflation would rise to 4.2% in the first six months of this year (Core inflation was expected to accelerate to 3.7%), as economic growth gains pace and the labor market remains tight.
However, subsequent relatively dovish comments from RBA Governor Bullock (signal that the RBA will likely stay on hold in March policy meeting) poured cold water on fresh bulls and pushed the price lower, to reverse about 50% of post-data advance.
Technical picture on daily chart remains bullish overall, as the price action holds in extended consolidation under new three-year high (0.7147).
Broader bullish structure is expected to remain intact while the price stays above 0.70 zone (psychological/recent range floor/near 50% retracement of 0.6896/0.7147 upleg).
On the other hand, loss of 0.70 handle would put immediate bulls on hold for deeper pullback that would unmask next trigger at 0.6870 (Feb 6 higher low).
Res: 0.7116; 0.7147; 0.7207; 0.7265.
Sup: 0.7043; 0.7000; 0.6975; 0.6896.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.